How well-being can be incorporated into policymaking

October 14, 2016

One of the major challenges of policymaking is deciding where to allocate limited resources. These decisions not only impact how businesses start up and operate but they also affect how individuals live and work. However, a region’s goal of developing strong economies can be at odds with maintaining a healthy and equitable place to live. The Institute raises this challenge in its latest Working Paper, Looking beyond GDP: Measuring prosperity in Ontario.

The Institute has traditionally used Gross Domestic Product (GDP) to calculate Ontario’s prosperity gap. Accompanying policy recommendations advocate for the use of the province’s resources to close this prosperity gap. However, there are times when pursuing economic goals can come at the expense of other, perhaps more social aspects of prosperity. For example, the Institute’s analysis leads to the recommendation of prioritizing the investment of productivity-enhancing infrastructure over other buildings such as libraries and science centres. Yet many may argue that these are community fixtures that contribute to a wider definition of prosperity.

As a result, our latest Working Paper analyzes 11 indices of well-being in recognition that prosperity is multidimensional, extending beyond that of just economic measures, and is informed by cultural values and institutional histories. Many regions around the world equate prosperity with thriving financial conditions, others with a strong social environment. Because prosperity has and still means different things to different people, international organizations like the OECD have moved toward the term ‘well-being’ instead. To be clear, the OECD and others like Canadian Index of Wellbeing (CIW) state the domains included in their definition. For the OECD, this includes things like access to services, education, health, jobs, life satisfaction, and safety. For the CIW, this includes similar elements but also adds living standards, time use, and leisure and culture.

Once well-being began to be defined around the world, certain democracies began exploring the possibility of integrating it into their policies. The UK is one leader in this area.

The first is to determine priorities. Policymakers must decide which well-being priorities are more important, whether it is health outcomes, low crime rates, or overall life satisfaction. It may be that determining one single priority is impossible and undesirable, or that priorities will ebb and change over time. Defining the objectives of this exercise would be a task of policymakers and the broader community

Second, general well-being policies can be introduced. For example, policies could be aimed at decreasing unemployment; research suggests that unemployment has detrimental well-being effects and that any work is better than no work. This could begin with an examination of the effectiveness of Employment Insurance and skills retraining programs currently offered in a jurisdiction.

Finally, policies must be evaluated. Evaluating the impact of policies is important since policies are designed with specific outcomes in mind. If well-being was the priority, governments would collect data on individual well-being and attempt to find ways to measure the impact of policy interventions on that well-being.

In many cases, policies designed to solve a specific problem for economic reasons may also result in improved well-being. For example, a policy designed to relieve congestion not only improves the productivity of workers but also increases their physical and mental health. Globally, some Swedish companies have introduced six-hour work days, which has had positive implications on work-life balance, productivity and combatting absenteeism.

Ultimately, all well-being measures are interconnected. There may be no silver bullet policy interventions that will improve well-being writ large. However, if the recognition of GDP’s flaws is widespread, all we ask is that government recognize this fact and adapt accordingly. This would mean capturing relevant data, sharing it publically, and beginning to discuss how policies aimed at maximizing well-being might work. The measurement of well-being metrics should not only be left to academics, universities, or non-profits. Governments must get involved.